I wasn’t going to bother publishing this here, but after today’s Public Accounts Committee session I changed my mind.

Margaret Hodge has basically decided to ignore all the evidence provided by Troy Alstead from Starbucks and rely purely on rumours and conjecture instead. What’s the point in giving evidence to this committee if they just ignore it?

I think her behaviour was irresponsible in this respect and now she has made allegations which will damage the relationships that HMRC and HMT have with accountancy firms.

So, this is evidence I submitted to the House of Lords call for evidence which closed on Monday. I debated whether it is relevant to them and then rushed to write this the night before. That’s my excuse for it, anyway…

I had figured the PAC would be more relevant but they only take evidence from the tabloids so there’s no way they’ll ever read it.

3 Responses to House of Lords evidence

I’ve been having a very interesting, if somewhat one-sided, conversation with Richard Murphy about that on his blog. His case is simply: “the matter has been investigated by the PAC. The evidence is clear”.

It’s so clear he can’t even tell me what it is 🙂 But that seems to be because comments are closed on that topic, for some reason.

But, if he can’t argue the point over how the royalties and coffee beans clearly appear to be on an arms-length basis then he hasn’t much to go on.

Interestingly, he said at the finance bill session that he thought Starbucks were profitable but not massively profitable. Which matches the overall picture with respect to trading profits shown in the tax reconciliation notes.

He was always going to have to argue over the quantum of the arms-length values to show it as tax avoidance. If he doesn’t have anything to back that up he is on very shaky ground indeed.

I really do suspect it just that he’s been taken with Bergin’s point about Starbucks claiming to make profits when reporting internally for one purpose, and how that apparently conflicts with making tax losses; and once the suspicion has arisen it’s impossible to shift it.

He’s moved the burden of proof from himself to Starbucks: he doesn’t need to prove tax avoidance, they need to prove innocence. They will never succeed, because it’s hard to prove a negative. If it’s not royalties it’s beans; if it’s not beans it might be financing, or admin costs, or staff recharges… no matter how many things are proved to be right, there’s always going to be something else that could be wrong.

Just like Hodge with the Big 4. She knows full well that they’re eeevil, and their denials just prove it. I loved the Morton’s Fork over the OTS, and the incredulous “Naive!” over captive insurers was a classic. Red tape a problem? In insurance? Laughable! Of *course* tax avoidance is the only reason to be in Jersey, even if the CFC rules mean you don’t actually avoid tax.

I’m reminded of an ex-client who was looking to buy a company in Guernsey,and was very excited at the thought of the tax planning that could be done if he had a Guernsey company in the group. He was very disappointed to be told that this was a perfectly ordinary trading company, and there’s no magic about the Channel Islands that wipes out tax just like that – he’d just bought into the same hype that Hodge has been taken in by.

Going by that logic Hodge herself must be a tax avoider because as she proudly told us – twice – she’s been to the Caymans. She *must* have caught the tax avoidance lurgi! 🙂